The most likely future for cryptocurrencies

So yesterday, I said that bitcoin will not escape the regularity focus. This is a philosophical debate, rather than a technical one, and may be decided by the precedents that have gone before as the internet of money is actually Net 6.0.

What I mean by this is that the internet has undergone at least five iterations of development since it began – there may be more – and cryptocurrencies are the sixth. The six iterations to date include the:

Internet of access

Internet of information

Internet of commerce

Internet of content

Internet of relationships

Internet of value (or money if you prefer)

The first iteration was taking the web technologies and making them usable. This was moving from fixed lines to dial-up lines to broadband. It was moving from TCP/IP to the WorldWideWeb to HTTP to the Internet of Things. It was all about making it easy to get online.

The second iteration began soon after WWW, and focused upon providing a news service, advertising and creating information services. The web was cluttered with businesses that were starting to tell people about their capabilities. It was one step forward from television, and was all about web marketing. Shouting for attention. That’s all calmed down now, and the internet of information is now dominated by twitter and facebook, where getting attention is all based upon merit and fame, rather than purely being able to do this by paying for it.

Talking about paying for it, the internet rapidly developed from WWW to Web Marketing to Web Commerce. The commerce age was developing slowly in the 1990's, until the internet bubble burst as large numbers of start-ups seized the opportunity to be a web pioneer. Obviously the big cojones of these developments is Amazon, but there were others. Many failed – Boo.com being a great example - but there are always some successes – Amazon being a great example, but don’t forget iTunes and the Apple Store and more.

Then we move onto the internet of content, which iTunes and others illustrate well, but I guess I’m getting more at the developments beyond commerce and trade, advertising and access, to the age of blogging and developing personal brands. The launch of YouTube and the ability to create and share content easily that is user generated, rather than media generated. It preceded the age of Facebook and true social media by a heartbeat, but led to that age of Facebook and social media. It was a short period after the dotcom boom-bust, when we saw individuals and small firms arising with a voice, because they had great content. Today, we have YouTube channels of media based upon these individuals – PewDiePie and the SloMoGuys being top exponents – and hence, content became monetized and many moved to create great content.

On the back of content and commerce, we then built relationships and the social age of the internet arose. This is almost a golden period of internet development as gears shifted from a system that needed great technical skills to use as a sharing system, to one that became easy to use. It is why kids are so hooked on their Snapchats whilst their mums and dads share their kids photos via Facebook. It is the age of the easy share, like and favourite and led to an internet of social (and antisocial) relationships where love can be sent in an update whilst hate in a troll’s tweet. The internet of relationships has been a complex affair, but was still missing one thing: currency.

Currency in the form of value exchange. Currency is now here in the form of cryptocurrencies and the internet of money is changing the world slowly but surely. Bitcoin, the blockchain, Ripple, Circle, Colored Coins, Coinjar and more are all sprouting into life to change the dynamics of money for the internet age.

This will change things, but how is interesting in that if you look at the previous ages of the internet, lots of things occurred to break the order of things … and then slowly the government, tax officers, lawmakers and commercial structures appeared to bring the order back.

The Napsters, Pirate Bays, Silk Roads all appear to exploit the new technology capabilities and structures in order to break the old ones apart. However, soon enough, these new world orders are superseded by a hybrid model such as the iTunes, Amazons and the Law in order to bring order back from chaos. That is why, as I blogged yesterday, things start to change during the early stages of a technology revolution, only for order to occur as the government and regulators catch up.

It used to be that you could order cheap goods from Hong Kong or the USA into the UK … now, the lawmakers ensure that import duties are paid via the logistics and delivery agents. It used to be that China was the largest trading nation in bitcoins … but then the government banned its usage and its trading dried up.

This is how things change. It may be that you could trade globally with cryptocurrencies without government interference, but no doubt they will just work out how to tax you on the cash-in cash-out processes of using such currencies. That’s probably why the Federal Reserve’s most recent white paper on The Future of Payments in the USA actually includes the probability of using some of the internet’s decentralised architecture, vis-à-vis the blockchain, to transact in the future. But it won’t be in a peer-to-peer unregulated state, but in a centralised structure using the low-cost decentralised architecture.

Regardless of what happens over time, it is amazing to see the dynamics of this new sixth state of internet development.

Oh, and there are more stages to come as we can see the:

Internet of things (TVs and cars on the net leading to self-program and self-drive systems);

Internet of sensing (machine-to-machine communications);

Internet of robots and bots (when your carers and doctors are machines); and

Internet of smell, taste and touch (as we have sight and sound only today).

I am sure there will be even more stages of network developments than these but, for now, that will do.

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About Chris Skinner

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There’s another stage.. the Internet of Identity. Once we can trust who people really say they are via the Internet, it will change our on-line behaviours significantly.
Knowing your customer and single customer views will be possible, and probably encouraged, and we’ll be able to finally reach a true implementation of single sign on across the Internet.
Once we have an online identity, which is trusted by financial organisations, they will be able to exchange our data (but only the minimum dataset required), ultimately making it easier for us all – the customers.

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